The wealth management industry is clearly in a state of flux. Change is everywhere, and the good news is that the winds of change are nudging advisors to improve their businesses—and their offering for clients and prospects.

In particular, emerging and lifestyle firms1 are making adjustments in order to remain competitive in light of the proliferation of Registered Investment Advisers (RIAs) with over a billion in assets under management (AUM), which is resulting in improved services and outcomes for clients. 

Perhaps one of the most prevalent trends is consolidation. For broker dealer (BD) affiliated advisors, consolidation happens among the BDs themselves. For RIAs, consolidation of custody and the RIA firms themselves is fueling the rise of mega RIAs (greater than $1 billion in AUM).

What’s more, all types of firms are grappling with the gift and the curse of rapidly emerging new technology tools, options, and threats. The list of trends affecting advisors is lengthy, and the pace does not appear to be slowing any time soon. 

The perks of being a large RIA: scale and resources

As new trends continue to take hold, there is evidence that firms with scale are positioned best.2 In fact, as “more RIAs turn to financial planning and expand service offerings to remain competitive and stay ahead of these trends, rising costs are beginning to induce profit margin compression.”

This means that the cost and complexity of running an RIA has increased. Of course, large firms have the resources to assemble an entirely bespoke business, but emerging and lifestyle firm owners need to be smarter about how they approach their infrastructure. For instance, an RIA with a $100 million AUM business can’t be assembled the same way as a firm with $1 billion in AUM – at least not easily. The firm with $1 billion will be able to deliver value at a much lower cost to the client. The mantra of “copy success” is no longer realistic for a smaller firm looking to mimic the approach of a much larger firm; the economics just don’t work. 

The unexpected advantages of running a small firm

However, there are advantages for smaller firms with less than $250 million in AUM, which represent almost 79% of all RIAs.2 They can compete by adding value in a more intimate and personal way than larger firms, where the advice is often more generalized. Smaller firms also have more paths forward and options to pursue.

For many emerging and lifestyle practices, the key to success lies in their ability to deliver depth of advice in a scalable way. Many smaller firms can make an impact with clients by emphasizing a deeper and more specialized focus. 

The firms that seem to be navigating these advantages have a few things in common:

  • They recognize the need to assert themselves. In the perpetual quest to deliver quality advice, grow the business, be competitive, and be compliant, sitting still simply isn’t an option.
  • They understand that doing everything in-house isn’t realistic. They embrace relationships with other organizations that help them expand the depth and breadth of their offering. They might align with a firm that specializes in niche areas like cybersecurity for executives, or choose a platform that provides sophisticated investment and planning strategies that a small firm couldn’t otherwise offer. They’re always looking at what others can offer to help improve their advice delivery to clients.
  • They don’t overcomplicate things. They stick to what they’re good at, and do not try to be all things to all people. They may not have a chief technology officer or the operations expertise to assemble a truly bespoke technology infrastructure, so they select more encompassing packages for their technology. 
  • They specialize. Call it a niche or a target segment, but either way, the emerging firms that are succeeding have largely defined an area of focus—and they have crafted their messaging. Most larger RIAs and institutions cannot offer this type of specialized focus.

As the industry continues to evolve, many smaller RIAs may find that keeping things simple is better. The firms that get it right choose to focus their efforts on differentiating their advice and improving their messaging, versus obsessing over which technology or investment solution can beat up all of the others.  As one advisor shared with me years ago, “running a practice is hard, but it doesn’t have to be complicated.” 

Perhaps the formula for success can best be expressed this way:

Concise message + targeted audience + personalized advice + simplified infrastructure + focused owner = contented clients and advisors.

Investing involves risk including possible loss of principal.

1. A lifestyle firm is defined as an RIA not considered a digital provider or a firm with >$1B in AUM.
2. “U.S. RIA Marketplace 2020,” Cerulli Associates,, pages 74, 40, and 55 respectively. 


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